Home price growth accelerated slightly in June due to upward pressure from limited inventory and strong buyer demand.
The S&PCoreLogic Case-Shiller Indices, which cover the entire nation, rose 5.8% in the 12 months ended in June, up slightly from a 5.7% year-over-year increase reported in May.
Home prices hit a record in September and the pace of growth has largely accelerated since then.
The 10-city index gained 4.9% over the year, down from 5% in May. The 20-city index gained 5.7%, identical to the previous month. Economists surveyed by The Wall Street Journal expected the 20-city index to rise 5.7% in June.
Price gains have been driven by growing demand thanks to rising wages and a large demographic of people entering their 30s and looking to buy homes, as well as limited supply. Economists have said they are concerned that price growth that continues to outpace income growth won't be sustainable.
"Given current economic conditions and the tight housing market, an immediate reversal in home price trends appears unlikely," said David Blitzer, managing director at S&P Dow Jones Indices. Mr. Blitzer noted that while rising prices are driving down the affordability of homes, job and wage growth and low mortgage rates are helping to make homes more affordable for some.
Prices are growing quickly and much faster than incomes giving some economists pause. But home-price growth remains less than half of what it was during the housing bubble in the mid-2000s. Then prices grew by more than 14% for much of 2005.
Some markets are seeing remarkably rapid gains driven primarily by strong economic growth. Seattle led the way in June with a 13.4% home-price increase, Portland reported a 8.2% year-over-year gain and Dallas reported a 7.7% annual increase in home prices.
Month-over-month, the U.S. Index rose 0.9% in June before seasonal adjustment, while the 10-city and the 20-city index both rose 0.7% from May to June.
After seasonal adjustment, the national index rose 0.4 % month-over-month, the 10-city index remained flat and the 20-city index rose 0.1%.
After seasonal adjustment, 14 out of 20 cities saw prices rise in June.
Rising home prices are helping to depress sales activity by making homes less affordable. Sales of previously owned homes fell 1.3% in July to their weakest level of the year, the National Association of Realtors said last week.
"If you look at the inventory decline and how fast prices have risen, there's just not enough homes for sale and prices are too high for a lot of buyers," said Nela Richardson, chief economist at Redfin.
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(END) Dow Jones Newswires
August 29, 2017 09:16 ET (13:16 GMT)